5 on 5: GMs address new competition in market
 
5 on 5: GMs address new competition in market
28 FEBRUARY 2017 8:30 AM

New competitors for hotels aren’t always the result of new buildings. Renovations, rebrandings and the adaptive reuse of buildings that haven’t traditionally been hotels also can give GMs headaches.

CHICAGO—HNN editorial director Jeff Higley sat down with five general managers of hotels managed by Hostmark Hospitality Group to tackle five topics affecting GMs everywhere. Each day this week, we’ll feature excerpts from the discussion.

  • “5 ON 5”: Keep up with each part of this series here.

Are you facing new competition in your market and how do you adjust to that?

Dennis Law, general manager, Holiday Inn Surfside Beach (South Carolina)
“What I’ve seen in our area and a couple of other areas I visited is the family-owned mom and pops, some that have been there for 20 or 30 years, are cashing out and they’re being purchased by corporations. They’re either renovating, changing the name, putting a flag on them. There are several areas of Myrtle Beach that have been knocked down and they put up new buildings. A property just to the north of mine was independent for years and has been re-flagged. We’re on the backside of a hurricane, and we had a renovation planned, but a lot of these properties are going to have a forced renovation through the insurance and restoration. They’re going to be all refreshed properties quite a bit from the storm damage, so it will be stiff competition up there for sure. Also, there’s always that limited-service property that has a meeting room, and it’s the morphed property that is dabbling in the full-service arena.”

Dwight Miyakawa, general manager, Hampton Inn & Suites and Homewood Suites-West Loop (Chicago)
“One of the things that I’m finding is this new integration—new brands that are coming online that are (different) in a lot of ways. … Even though there are differentiators between all the brands and all the different levels, to me it feels very gray in a lot of cases. … We talked about the Marriott and the Hiltons have all these new levels of select-service brands that are out there. So when we take a look at our comp sets, not only are we looking at how we play into against the traditional brands going against Marriott, Hyatts, the IHGs, but now I’m looking at how I play within my own family of hotels. You always take a look at all those different brands and how you should position yourself. But you find yourself sometimes a little confused about how you play against not only your regular comp set but within your own brand of hotels, in your own (global distribution systems) and reservation systems.”

Mimi Varchi, general manager, Holiday Inn Cape Cod-Falmouth (Massachusetts)
“I’m pretty fortunate in (the supply) department. What we are seeing on the Cape is a lot of change in ownership and hotels changing hands. So, you’ve got new owners and management companies coming in and taking over properties that have been there and are starting to operate a little bit differently, paying attention more to revenue management. We’re fortunate to be the only branded hotel in the upper Cape, so we always have that going for us. But I don’t experience the same as the others do.”

Brian Cooney, general manager, Holiday Inn Chicago Mart Plaza
“Since 2010 when we started coming out of the recession, every brand wanted to have multiple properties represented in downtown Chicago. So, your Marriotts, your Hiltons, Hyatts, everybody took notice of the economy getting better, and investment money became a little looser, so they were all suddenly looking for opportunities to get more assets in the downtown Chicago market. … There’s really very little available land so the phenomenon that’s happening here in Chicago and maybe New York and some other cities like us is the conversion of office buildings to hotels. Now it’s no longer offices that would put business into hotels, it’s now competition for us. … There’s been tremendous growth of hotel rooms in the last three to five years here with both boutique and lifestyle brands that have come into the market, as well as some big boxes like the Loews. And the Marriott Marquis at McCormick Place (the largest convention center in North America) is just opening. Hilton has just announced another multibrand complex down at McCormick Place. The farther north you get from McCormick Place, the tougher times the hotels are having because when there’s major conventions in Chicago and they’re at McCormick Place, (the guests) want to stay as close to McCormick Place as possible. … We were able to build a budget this year based on flat to last year, which we feel is more realistic to what we think is going to happen here. And all the data we’ve seen since and all the experts have kind of indicated that Chicago is going to be pretty flat anyway. So, we feel good about our budget, but we feel it’s very realistic. There are more hotels in the pipeline, so I’m a little concerned going forward in the next few years in the Chicago market that we could be overbuilt.”

Jacque Raffaele, general manager, Sheraton Milwaukee Brookfield
“We are actually struggling pretty significantly because of new supply. We are in an area that saw some growth in demand at the beginning of 2016, but then towards the middle to last half saw a steady decline in demand. We had an independent property shut down from February through May. When they reopened in June, they opened up as an Embassy Suites, which is essentially a new supply because now all of a sudden they’re a branded property. They’re a Hilton property, so they’ve got the Honors program and the reservation backing that they didn’t have before. We just had a Home2 Suites open in our market. We also had a Radisson that just opened. And we’ve got two properties that are being opened later this year. So we are constantly seeing new product come into the market. In our very immediate area are hotels that are shut down for renovations that created for us, last year from the beginning of the year, a lot of business because of the shortage of the rooms. So … when you’re looking to now increase, it’s a completely different ballgame. Those rooms have not reopened in their branded hotels, and so now the opposite is happening to us where we’re in a renovation, they are open and we’re seeing that process hit us pretty significantly.”

So is it really more about revenue management at that point?

Raffaele: “It comes down to marketing, driving awareness. The one thing we noticed right away was you hit Google, there’s a banner for Embassy Suites. … We brought in a marketing manager, and we’re rebuilding our partnerships with the community. We’ve been a staple in the community for years, and we need to go back and leverage that community partnership.”

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